With elections coming up in May 2024, the potential for market volatility has many investors wondering where to put their money. Investor Balamurugan V recently asked me for advice on what to do with the Rs 3 million he earned from selling land. Considering the current situation, we have proposed a strategy aimed at good returns while protecting his money. In this article, we will discuss how to invest 30 million rupees in mutual funds in the current market scenario where the stock market is at its peak level and elections are scheduled in May 2024.
What is your reader’s goal?
Before we get into the details, let’s first understand Balamurugan.V’s investment objectives. He wants to sell the land to raise funds (apart from capital gains) and invest this Rs 3 million of his money for his daughter’s future, which is more than 10 years away. Although I am aware of some risks, I also aim to earn stable returns over the medium to long term by investing in investment trusts. He also wants to invest in a mix of equity and debt schemes.he always wants to check Top Mutual Funds with Highest Returns in Last Financial Year 2023-24 Too.
His goals can be summarized as follows:
- He’s willing to take a high risk.
- We are aiming for a long-term investment of more than 10 years.
- His purpose is to build wealth for his daughter’s future
Can he invest in stock funds now?
Given that the stock market is currently at an all-time high and the election is just a few weeks away, the stock market could become volatile. While some experts expect the stock market to hit new highs in the coming months, others warn that it could see a steep decline of up to 30% after the election. In these uncertain times, it may be best to adopt a systematic approach to investing by investing regularly through SIPs (Systematic Investment Plans). But what is the best strategy to invest a lump sum of Rs 30 million now?
A solid strategy to invest $3 million now
One of the most effective approaches to lump sum investing is to invest in liquid funds and undertake a systematic transfer plan (STP) for the next 9 to 12 months into a portion of your chosen equity mutual fund scheme. is to execute. Investing in one or two mutual funds can ruin an investor’s portfolio.Check what happened if 5 worst-performing mutual funds of the past 10 years
Instead, we recommend choosing between 5 and 7 mutual funds depending on your investment volume.
Understanding liquid funds: Liquid funds are a type of fixed income mutual fund that invests in short-term debt securities, such as government bonds, commercial paper, and certificates of deposit, with maturities of up to 91 days. Due to its short loan period, it is considered the safest fund among other mutual funds. Liquid funds are ideal for short-term investments and can generate higher returns than savings accounts.
What is STP in mutual funds and how does it work? A Systematic Transfer Plan (STP) is a mutual fund strategy that allows investors to move a set amount of money from one fund to another at regular intervals. An investor can use her STP for lump sum investments or for averaging purchase prices over time. STP helps manage risk over time, especially during periods of high volatility.
We suggested to Mr. Balamurugan that he start by investing Rs 600,000 each in different liquid funds. Thereafter, he can transfer his Rs 50,000 from each liquid fund to an equity mutual fund of his choice every month. This will help him avoid putting all his money into the stock market at once.
Recommended investment trust portfolio
Although there are hundreds of mutual fund schemes that consistently perform, he recommends a model portfolio that includes large-cap, mid-cap, flexi-cap, balanced advantage funds and aggressive hybrid funds. Currently, Mr. Balamurugan has already invested in some large-cap/mid-cap/flexi-cap funds, but he does not want to invest in such funds all at once and believes that in the future, he will not be exposed to the inherent risks of AMC. (I don’t want to invest in a single AMC fund or a small number of AMC funds).
Large-cap fund: Such funds invest in large, stable companies with low risk. As part of this, we have offered a large-cap fund that has been considered from the following perspectives: 15 Most Recommended Mutual Funds for Investment.
Mid-cap fund: Such funds invest in mid-sized companies that offer high growth potential, but also come with risks.
Flexicap Fund: Flexicap funds are flexible and can invest in both large and small companies depending on the best situation at the time. Simply put, such funds invest in large-cap, mid-cap and small-cap stocks. The HDFC Flexicap Mutual Fund recommended below is: 5 mutual fund schemes with the highest NAV.
Balanced Advantage Fund: These funds provide stability by balancing investments in stocks with safer options such as bonds.
Aggressive hybrid fund: These funds combine stocks and bonds, providing a balance between safety and growth.
Conclusion: In times of uncertainty, it’s wise to invest cautiously. For Balamurugan and others like him, diversifying investments across liquid funds and using STP helps reduce risk. By choosing the right mutual fund, investors can aim for high returns while protecting their funds.
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